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Mass Layoff Essay

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Stakeholder approach looks at the relationship between an organization and others in its internal and external environment. It also looks at how these connections influence the businesses conduct its activities. Stockholders rang from employees, stockholders, and customers to external agencies such as community and government. When analyzing from the social network perspective, a firm does not deal with one stakeholder at a time, but multiple stakeholders simultaneously, with interdependent relationships among these stakeholders (Tsai, Yeh, Wu, & Huang, 2005). GTX’s decision of mass layoff would result in different reactions among the stakeholders. Shareholders were pleased as it cut down the costs and helped the share price to rise in the …show more content…

Downsizing refers to organizational activities that aim to improve efficiency and productivity. Ethical downsizing has to balance the needs and power of individual stakeholders. It can only be seem as ethical if the company has reasonable reasons such as limited resources and capital and has fully considered and took care of the consequences of downsizing. However, in this case, GTX ‘s action of mass layoff was merely to meet stockholders’ economic needs. There was no managerial ethics. The top management could sell off profitable unit –healthcare division or the spare office to avoid mass layoff, however because of their own interests, they refused to do so. The only response that Gene received from James was “stockholders would like to see their share value maximization” and “they (employees) are not our responsibility. ” Furthermore, the primary aim of strategic downsizing to increase efficiency is doubtful and top manger’s self interests could be one of the reasons behind the decision. GTX’s CEO James was one of the shareholders, increase the shareholder wealth would eventually helped him to increase his share values as well. His shares worth 600 millions after the layoff and he was paid at a $22 million salary. Despite thousands of people lost their jobs in GTX, James was still able to make to the Fortune list. In the firm, when Gene questioned for the legal scrutiny of firing old employees, James replied, “ I’m confident all of these dismissals will stand up to outside legal scrutiny”, “we are not breaking any laws.” Therefore, the reason for GTX downsizing was primarily to cut costs and increase share price so as to fulfill shareholders’ self-interests. The company did not consider the societal consequences that brought about and did not put in enough effort to help their employees transit into new job

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